American Financial Accord: 25c For $1

Investors who entrusted about $7 million to American Financial Planners Inc. will get back only about 25 percent of their money under a proposed settlement, a state official said Friday.

After a Tribune investigation, state officials last year brought a civil suit against the Itasca-based company and its president, Louis R. Sauer, that accused them of misleading investors who bought the company`s ``hard asset accounts`` of diamonds, rare coins, antiquities and paintings.

Investigators from the Illinois Department of Securities found that Sauer typically marked up the value of assets sold to investors by 600 and 700 percent, said Assistant Atty. Gen. John A. Ward.

In one case, an investor gave Sauer $25,000 and had placed into his account a diamond that invoices showed Sauer had purchased for $1,300 and a painting bought for $1,500, Ward said.

Ward also said there were ``hundreds of instances`` in which investigators could not locate the assets listed in investors` accounts.

Under the proposed settlement, Sauer`s 400 investors will be allowed to take possession of their assets or share in the proceeds of a sale conducted by a court-appointed trustee over the next two years.

But Ward estimated that the sale will produce at most 25 percent of the $7 million invested with Sauer.

Sauer would be liable for any shortfall under the settlement, but Ward said Sauer`s personal assets are not expected ``to come close`` to providing investors full reimbursement.

The settlement was to have been finalized Friday in Cook County Circuit Court, but one of Sauer`s attorneys, Theodore T. Scudder, suffered a heart attack shortly before the morning hearing, causing Judge Roger J. Kiley Jr. to continue the case until Wednesday.

American Financial Planners closed last year shortly after suits were filed against it by state officials and the Securities and Exchange Commission. Sauer settled the SEC charges by signing a consent order that neither admitted nor denied his guilt.